SIGMA Spectrum Vol. 1, No. 1

Volume 1, Number 1

SIGMA's Newsletter:
A New Look and a New Name!

Five Important Characteristics of Good Stewardship Reports

Frequently Asked Questions About Stewardship Reports

About the Author

Software Solutions for Value Added Service

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SIGMA's Newsletter:
A New Look and a New Name!

We are pleased to introduce SIGMA Spectrum, the successor to our popular SIGMA Circle Solutions newsletter which has been in publication for five years. This is the first of several changes that you will see in the coming year as SIGMA combines its web site and other resources with our sister company, Specific Software Solutions. Many of our customers are not aware that SIGMA and Specific Software have been working together behind the scenes for many years. We are now combining forces in a more visible way so that insurance and risk management professionals will associate us with the full scope of products and services through our two organizations.

The goals for the SIGMA Spectrum newsletter will continue to be the delivery of information that is relevant to issues you face. We will present this information in a concise and usable format with improved subscription control. See our subscription information for more details. And be sure to continue sending your suggestions for newsletter articles to Al Rhodes!

We're pleased to have Rob Ekern contributing his expertise on stewardship reports in this issue. Read on for his many good ideas, including the formula for an effective stewardship report.


Stewardship Reports by Rob Ekern Consultative Brokers (sm) and risk managers know that stewardship reports are the only antidote for keeping clients and senior management informed. They know that stewardship report presentations are the only time in which they can provide quality information without the emotion of the renewal. The stewardship report is used to reinforce the value of the brokerage firm or risk management department and demonstrate the impact on the client’s or company’s balance sheet.
You should not wait until renewals are upon you to prepare and present your stewardship report.
Brokers know if they wait, they may find competition they didn’t expect. Risk managers know that internal communication is key to successful implementation of effective risk management plans. In either case, if you get behind the power curve, you will be spending all your time protecting your best interests, not necessarily the client’s or company’s best interests. The timely delivery of a stewardship report allows consultative brokerages and risk managers to greatly reduce the stress around renewal time. If properly executed, the client, or senior management, has been appropriately prepared for the marketplace turmoil and has understood the unique value the brokerage firm or risk management department has brought to the table. Consultative brokers know that stewardship reports are critical to the retention and growth of large accounts. Risk managers are discovering that a professional approach to their position within the organization assists in the implementation of value added risk management strategies. A stewardship report is one of the few techniques you can use to fully demonstrate your expertise, capabilities, and resources.

Five Important Characteristics of Good Stewardship Reports Stewardship reports are done at a time when the heat is off the renewal process. This allows successful consultative brokers to focus on client issues rather than renewal pricing. For the risk manager, this allows for effective planning that is not overly focused on price issues. A stewardship report is a great time for consultative brokers to build relationships. In many cases, these meetings will include client team members that you have not met in the past. For the risk manager, the stewardship report allows for better integration of the risk management process into the strategic planning process of the organization. A skillful stewardship report provides a consultative broker with the opportunity to discuss marketplace changes and begin a renewal strategy in partnership with the client. For the risk manager, discussions concerning alternative loss financing methods, change in deductibles, or other topics are best explored in an environment of careful contemplation and openness. The stewardship report is not a sales session. For the consultative broker, the stewardship presentation must outline the impact of your past representation. For the risk manager, the presentation must provide feedback and measured results from previous recommended changes. The stewardship report is presented in a formal business setting, not in a crowded restaurant (broker) or informal meeting (risk manager). As either the consultative broker or risk manager, you must be prepared to ask and answer tough questions about the marketplace and your strategy to protect the client’s best interest. In fact, whether or not the question is asked, you must answer it!	About the Author An accomplished speaker and published author, Rob Ekern is president of C.R. Ekern & Company, a firm that provides clients with the necessary tools to differentiate themselves outside the commodity environment. With over twenty-two years experience as an insurance agent and broker, Rob is considered an industry expert in the area of Consultative Brokerage™ Production. An Experienced Actuarial Resource SIGMA supports risk managers and the consultative broker by providing an experienced actuarial resource. Consulting services include the analyses of both traditional and alternative insurance programs to insure proper financial reporting and program funding for entities of all sizes and types. For more information, please email Al Rhodes, ACAS, MAAA, president of SIGMA or contact SIGMA at 615-352-3944. Software Solutions for Value Added Service: Compute and Analyze Alternative Loss Financing Methods with NPVision Specific Software's newest product, NPVision, can help you evaluate and communicate various alternative loss financing methods with your clients. NPVision allows you to easily change assumption data and see what the effect would be on the net present value cost, leading to increased accuracy of cost allocation and risk management decisions. The company also offers other software products which can help you deliver accurate calculations, insightful analyses and value added service to your clients: check out ModMaster 2000, QuickMod.com and Loss Forecaster II!

Frequently Asked Questions about Stewardship Reports In discussing stewardship reports with our consultative brokerage clients, I am often asked the following questions. These questions are listed below. While these focus on the brokerage side of our industry, much of the information is applicable to internal stewardship reports presented by risk managers. Which accounts should receive stewardship reports? Stewardship reports should be done on your absolute largest accounts. I call these “franchise accounts.” Each of you as producers has a small number of accounts that make up a very large portion of your book. These are the ones with the highest level of expectations and are the top targets of other brokers. What information do I need? In addition to the traditional insurance documents and loss data, you should have financial statements and knowledge of the client’s strategic plans. Your stewardship report must focus on ways your firm has and will impact the client’s balance sheet and bring value in the future. What is the formula for an effective stewardship report? Here are the seven sections of a well-presented stewardship report: Brief introduction to your firm - The history, expertise, and team members. Service review of completed projects. Demonstration of past value - Show three ways your firm has reduced the client’s TCOR (Total Cost of Risk) over the past eighteen months. Review of marketplace - Provide your client with “straight talk” about the condition of the marketplace for their specific industry. Demonstration of anticipated value - Show three ways your firm will impact the client’s TCOR over the next eighteen months. Use the client’s balance sheet and strategic plans to demonstrate your value. Your commitments - Give the client a yardstick to measure you by in the future. Your client's validation - Remember that your strategic purpose of the stewardship report is to establish and maintain broker control. Without a validation from the client, you cannot ascertain your position. What happens if my client is not interested in a stewardship report or will not give us validation during our presentation? In this case, you are probably in deep trouble and are weeks away from being fired! You must look your client in the eye and ask the toughest question any broker ever has to ask: “Is there a problem that we should discuss?” Be prepared for the answer and speak candidly - this is the best time for this discussion. You can fix the problems now, not after the Broker of Record Letter goes to someone else! Consultative brokers across North America are presenting stewardship reports in August for their January renewals. They know that if they wait until September it may be too late, as other brokers may already be in the client’s water. They have recognized that the effort required now will pay great dividends in December. Stewardship reports are not only the antidote for marketplace craziness; they are also the key to client retention. This article is copyright C.R. Ekern & Company. "Consultative Brokerage" is a registered trademark of C.R. Ekern & Company.